Case 9: Song1. Shortly after 9/11, with a slow economy and new –found fears of air travel, most airlines were losing tons of money and several major airlines went bankrupt. Despite this, some low-price, low-cost airlines, such as Southwest and JetBlue still managed to make profits. Delta took notice of this and after three years of the company losing billions of dollars they decided to try something radically different by creating a separately branded airline called Song. To compete with traditional airlines like American Airlines and upstarts like JetBlue, Song completely altered the common way of flying. Song got rid of sky-high airfare rates and priced the flights between $79 and $299 and increased utilization of the same fixed cost asset by flying planes more hours a day, using gates more frequently, and driving distribution to lower cost channels like the Internet. Song bought large planes, removed first class seats, and added 70 percent more economy seats. They increased the number of flights per day by turning the planes faster. Labor is another big cost for airline, they changed the way they scheduled flight attendants by having them fly more hours in a day and giving them more days off while keeping their pay static. Song ended up operating at 23 percent to 25 percent lower operating costs than the same plane in what was a traditional Delta configuration. Delta learned a lot from its Song experience. By changing its planes, removing first class, adding more seats, increasing the use of fixed costs, and offering lower fares, they were able to create a profitable airline despite a slow economy and people’s attitudes about flying post 9/11. 2. The amenities in the airline business are very important; price is not the only thing the customers want to be satisfied with. Song knew it needed a great product that was unique enough to attract 70 percent more people to fill up its new larger planes. A good overall experience and good customer service are also...

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...SongAirlines Case
Songairline was a low cost carrier subsidiary of Delta airlines that started in 2003. It was formed to compete with JetBlue and other low cost airlines for the Florida market. The market environment at the time of the case was extremely difficult with the rising costs of fuel, increasing security requirements after 9/11 and customers' expectations of lower fares. It has forced many big players in the airline industry into bankruptcy. The operational costs which include gate fees, ground operational costs etc. were increasing causing even more problems for the airlines. The fares in the Florida route were decreasing while the costs were ever increasing making it difficult to remain operational in that space.
The basic marketing strategy of SongAirlines was to reduce cost and increase volume through operational efficiencies and hence increase profits.
The company's main market strategy included:
1. Reducing unit costs and increasing the volume of units. By changing the airplane fleet to have bigger planes they increased the volume of seats by 70%.
2. Increase the utilization of the resources (planes, employees, gate space). They optimized the operational logistics and activities to give more operational hours and hence increasing the volume again. Employee working hour policies were changed to reduce...

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Airlines - US - August 2012
Attitudes Toward Airlines and Airline Travel
Key points
The many changes to airline travel over the last few years have been absorbed by air travelers and a majority (77%) agrees that they feel comfortable with the process of flying. However, while air travel is familiar to them, most (65%) feel that it is becoming “more and more of a hassle.”
The most affluent air travelers (those with a household income of at least $150K) are also the most frequent flyers and are the least likely to feel that airline employees are knowledgeable and helpful (61%). This means that airlines need to work harder to satisfy their most affluent passengers (who are more likely to buy upgraded services). Investing in customer service training and problem resolution skills may be needed to increase satisfaction among this segment.
Younger flyers (aged 18-44) are the most likely to want in-flight internet connectivity. However, although flyers have indicated that in-flight internet is important, few seem willing to pay for it. Since its introduction in 2008, use is said to have increased from an average of 4% in 2010 to 7% in 2011, and that it could reach 10% this year.
Most flyers are familiar with the airport routine, but think it’s a hassle
Despite the many changes to the rules surrounding security, check-in processes, baggage allowances, and...

...Southwest Airlines in 2010:
Culture, Values, and Operating Practices
Summary
Southwest Airlines was founded by Herb Kelleher in 1967 to provide low-cost service between Dallas, Houston, and San Antonio. Although the U.S. airline industry had lost money in 15 of the 30 years between 1980 and 2009, Southwest has reported profit every year since 1973. Southwest Airlines is considered to be the most successful budgetairline in the U.S. Since 2000, the number of passengers flying Southwest has increased more by more than 28 million annually, whereas passenger traffic on domestic routes for other carriers declined. The airline is dedicated to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.
Southwest has weathered numerous challenges since its beginning but has found a way to maintain profitability during economic downturns even as other airlines were flailing. They succeeded by relentlessly pursing operating efficiencies ranging from small details like serving peanuts and not full meals to operating the same airplane model across the entire company. Southwest’s relentless quest to have the lowest fares combined with their organizational culture has made them the largest domestic carrier in the United States by passenger volume and has made Southwest profitable in the face of rising oil prices,...

...Delta’s New Song:
A Case on Cost Estimation
In the Airline Industry
Contents
Question 1 2
Question 2 3
Question 3 4
Question 4 7
Question 5 8
Question 1 8
Question 2 9
Question 3 11
Question 4 13
Appendix 1 13
Appendix 2 19
Question 1
There are several possible factors that seem more relevant to be as a cost diver to estimate Delta’s salaries:
* Available Ton Miles
* Number of Departures(thousand)
* Revenue Passenger Miles
* Revenue Ton Miles
* Revenue Miles scheduled
Salary cost for Delta consists of the payment to flight attendants and pilots so it can be determined by the hours flown. The miles and the time flown are correlated so between these cost drivers, available ton miles seems to be the most reasonable cost driver since it indicate the time that the pilots and the flight attendant work for the Delta.
Question 2
We first apply simple regression using each of the cost drivers mention above and other factor to estimate the salary by the cost drivers individually to see which one is best cost driver based on statistical reason and comparing R square.
The scatter plots are shown in appendix 1.
Results are as follows:
X | Y | Y=AX+B | R square |
Available Seat Miles | Salary Cost | Y=38.099X+262.71 | 0.0997 |
Available Ton Miles | Salary Cost | Y=0.5517X-682.64 | 0.5577 |
Number of Departures | Salary Cost | Y=-8.5728X+3184.7 | 0.3229 |...

...regarding low cost air travelling, air travel was at one stage only for large income earners. South African Airways (SAA) was the recognized and deemed as the loyal carrier for air travelling passengers. Prior to 2006 there were three low cost airlines operating within the country, on 15 November 2006 funded by SAA the emerging of Mango airlines took place. Tickets sales for the airline were sold out for almost a month, the prices of air tickets were either the same or cheaper than any other mode of transport within the country. This boosted consumer confidence and the other airlines weren’t able to compete with Mango’s reduced prices. Mango’s marketing strategies were of international standard and were well thought before they officially opened their doors to the public. They looked at most avenues of attracting consumers and reaping large profits and successfully achieved this. Porter’s five force framework was used in one of my analysis and I looked at all underlying advantages and the gaps. Some of the gaps identified was that Mango airlines offer limited destination routes compared to their competitors who offer a variety of holiday packages and destinations.
Source: I Staisch, 2007
A SWOT analysis was also done on Mango airlines and the gaps identified are passengers are willing to pay the lowest price they can get for air tickets therefore Mango would need to up their price...

...﻿SOUTHWESTERN AIRLINES
EXECUTIVE SUMMARY
Southwest Airlines is a company engaged in the operation of low cost. Since 1971 this has been the main competitive advantage of this company mainly because of its large efficiency processes and adaptability, allowing it to stay for many years as a pioneer in the low cost operation.
This company has developed an incredible environment where employees feel in their second home and family. This is such a great competition that employees are willing to reduce their salaries to that of Southwest Airlines enter fortress.
However, not everything is positive in the company and in its industry. The large number of competitors that copy the strategy of SWA, the power that lies with the providers and substitutes, the negative environment induced mainly by the fear of terrorism on flights, are examples of the difficulties that the company must face and resolve to continue its success.
Under these considerations, SWA must develop strategies to adapt to the current conditions of the industry and remain as leader in low-cost, leveraging on its successful culture for personnel management.
STRATEGIC ANALYSIS
VISION
Be the cheapest international airline in the market while maintaining profitability.
MISSION
Fill our planes to the brim while using ass less as possible. Keeping the minds hearts spirits and souls of our employees healthy.
STRATEGIC OBJECTIVES
Move...

...The importance of choice attributes and the positions of the airlines within the South African domestic passenger airline industry as perceived by passengers at Durban International Airport
B. Campbell & D. Vigar-Ellis ABSTrACT
12
5
This exploratory study sought to determine what customers perceive
to be the most important attributes when choosing their passenger airline within the South African domestic airline industry. In line with positioning research protocol, respondents then evaluated the performance of each airline on those attributes. The attributes that respondents perceived to be important in their airline selection and that differentiated amongst competitors within the domestic passenger airline industry were safety, punctual/reliable flights and low price. However, respondents indicated that they were only prepared to sacrifice Voyager Miles, and legroom and onboard space for lower prices. The positions of the traditional as well as low-cost airlines operating in the South African domestic market are plotted on positioning maps using the determining dimensions as axes.
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Key words: positioning, South African airline industry, determinant attributes
Introduction
The South African domestic airline industry is host to several airlines including South African Airways (SAA), South African...